Correlation Between Macys and Tillys

Can any of the company-specific risk be diversified away by investing in both Macys and Tillys at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Macys and Tillys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Macys Inc and Tillys Inc, you can compare the effects of market volatilities on Macys and Tillys and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Macys with a short position of Tillys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macys and Tillys.

Diversification Opportunities for Macys and Tillys

-0.33

Correlation Coefficient

Macys  Tillys

Very good diversification

The 3 months correlation between Macys and Tillys is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Macys Inc and Tillys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tillys Inc and Macys is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Macys Inc are associated (or correlated) with Tillys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tillys Inc has no effect on the direction of Macys i.e., Macys and Tillys go up and down completely randomly.

Pair Corralation between Macys and Tillys

Taking into account the 90-day investment horizon Macys Inc is expected to generate 0.47 times more return on investment than Tillys. However, Macys Inc is 2.12 times less risky than Tillys. It trades about 0.16 of its potential returns per unit of risk. Tillys Inc is currently generating about -0.12 per unit of risk. If you would invest  1,577  in Macys Inc on September 26, 2024 and sell it today you would earn a total of  105.00  from holding Macys Inc or generate 6.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Macys Inc  vs.  Tillys Inc

Macys Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Macys Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Macys displayed solid returns over the last few months and may actually be approaching a breakup point.

Tillys Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tillys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Macys and Tillys

The main advantage of trading using opposite Macys and Tillys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Macys position performs unexpectedly, Tillys can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tillys will offset losses from the drop in Tillys' long position.

The idea behind Macys Inc and Tillys Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.